Industrial growth impossible without electric infrastructure

Duncan Bonnett

Power-sector companies stand to benefit from the new opportunities afforded by the surge of new infrastructure projects and rapid industrialisation occurring in many African countries. Speaking at a VIP breakfast recently, Duncan Bonnett, the director of strategy and business development at Africa House, a research consutancy, said that infrastructure spend across Africa will grow at 10% per annum until 2025, exceeding US$180-billion by 2025, where adequate power is available.

The VIP breakfast was hosted by Pennwell, the organisers of the annual PowerGen and Distributech conference and exhibition.

With adequate power, he said, economies and industries see immediate benefits, while a lack of power exacerbated problems. He said that half of Tanzania’s crops are wasted because of a lack of cold storage facilities due to inadequate power. Power is such an underlying aspect of development that spans just about every sector and every opportunity. In parts of Zambia, he said, roads are in a poor condition not because of trucks carrying copper and cobalt doing the damage; but because of the trucks carrying diesel to the mines. The introduction of proper power to those mines would actually go a long way to solving the roads problems in Zambia. In DRC, he said, as little as 400 MW could enable mines to double their output.

Bonnett said that this infrastructure development will unlock growth in basic manufacturing in sectors such as chemicals, metals and fuels, which in turn drives growth in spend on utilities. Transport accounts for just over $200-billion in projects across Africa – largely in rail, ports and road, followed by power with around $150-billion of projects in the system – not including Grand Inga, which he said is unlikely to be realised in the foreseeable future. 17% of the power projects are by South Africa, followed by 12% in Nigeria.

Power development across Africa goes beyond the “mega-power projects” and extends to consumer solutions and modular solutions, he said.

Nigeria apparently saved $2-billion in foreign exchange last year because of the increase in their cement output. Just about every country in Africa is starting to see that dividend because of extra power in their industrial spaces, and we are starting to see this downstream in agri-industrial and basic materials manufacturing growth. Particularly strong development was taking place throughout Africa’s “energy belt”, he said.